Here are three things I wished I’d done differently when first setting up my Spoke Fund and my firm. This is certainly not an all-inclusive list, but these in particular have come up recently in conversations with prospective Spoke Fund managers.

1. Having a good CRM (customer relationship management) tool on day one.

At the end of 2008, I got an email out of the blue from a reasonably well-known fund manager whom I admired. He’d somehow seen the positive plug I gave his mutual fund company in this slideshow and was basically checking in to say, “thanks and good luck.” I thought it was extremely cool.

It also led to a ten minute phone conversation, during which he asked about the Spoke Fund model, my philosophy, and referred me to someone else he thought I should talk to. Near the end of the call, perhaps sensing he had driven most of the conversation, he wondered if there was anything I wanted to ask him. So I asked, “What’s the single most important piece of advice you’d give to someone just starting a fund?”

I was hoping his answer would make time stop and the seas part – you know, that he would bestow upon me the sort of unfathomable wisdom only available to a salty veteran who managed billions of dollars of other people’s money.

Instead he said this:

“Get yourself the best CRM tool you can find, because you’re going to need it.”

After scratching my head for a bit, I went out, swallowed hard, and spent $1200 on Salesforce.com…and then proceeded to bang my head against the wall for two weeks trying to figure out how to tame it. After that, I quit out of pure frustration, and really soured on all CRM tools in general, for about a year. Nothing I couldn’t do myself a lot cheaper with a spreadsheet and Post-it notes, I figured. Never mind what that grizzled old-timer had told me.

And the truth is that I really didn’t need a CRM tool that first year to help land my early investors. They were going to invest, regardless. But that circle only gets you so far, and I blew some chances early on to expand my early investor base outside that friends-and-family group because I had too much going on and no good way to track leads. Now, in year three, and having just spent a sporadic three months working on and off with my VA to finally get my CRM program updated and really making it an asset, I am kicking myself for not having that tool up and running earlier. Like, much earlier…meaning on day one, just like the man had said.

I have blown a not-insignificant amount of business by not being better organized about responding to leads and prospects, period. And that wasn’t really obvious until I’d looked back. If I’d had a really good, up-to-date tool, my business would be further along.

So, entering that stuff initially into a CRM system can be a bit tedious, and it will seem a bit unnecessary at first, but if I did it over again, that would be the first thing I’d do differently. Start on day one – not necessarily because it will bring investors in the door right away, but because it’s important to have a system that you have full confidence in when it comes to maximizing the opportunities to have real conversations with people who could become investors.

Finding new investors can be a real grind, and at various times I think the process makes everyone at some point flop dejectedly onto a couch and ask themselves, “What can I be doing differently here?” And while I’m not sure I know the exact answer in every case, I do think that in many cases that answer probably starts with, “Get a real process.” And that means CRM.

And as I’ve mentioned before, now I use Highrise by 37signals as my CRM system. Much better, simpler and cheaper than Salesforce. Probably worth more of a discussion down the road.

2. Combine my blog and my website.

This is a more recent revelation. As background, I have two sites for my business…the main company site at www.islainvest.com and my blog which is hosted at its own domain at www.caleinthekeys.com.

The reason I have two sites is that, basically, I wanted to stay local in picking the firm that designed my website. Alas, at that time (three years ago), they couldn’t quite figure out how to easily integrate the look of a blog with the rest of the site that I wanted. So I just went out and did the blog independent of my firm’s site. And in what may be a prime example of confirmation bias, that separation has made sense to me over the years – because it enabled me to do some things on the blog I probably wouldn’t do on the website. Like bragging about bonefish, for instance.

Turns out, though, that I get a lot more traffic to my blog than I do my main website. For a handful of reasons, my Google juice is higher for the blog. And as I’ve started talking to some SEO guys about a handful of online marketing things I’m considering, they have each in so many ways said the same thing:

My main website would be showing up a lot higher in Google searches if my blog was hosted at www.islainvest.com, instead of being a separate domain. Significantly higher.

There is a lot more to search engine optimization, keywords, backlinks, etc. than I will probably ever know, but this particular combo seems like a no-brainer given that had I done it earlier, (1) I’d have been saving money on hosting just one website instead of two and (2) it would have produced much better results in Google – which would likely have lead to more investors.

So, save money, more investors. Gotta consider that, no?

It’s hard to guesstimate how much of that additional re-directed traffic would have actually resulted in new investors over the years, but I’m pretty sure it would have resulted in more sign-ups for my email list, and as I’ve mentioned before, that has really been my top sales tool. And now, to combine the two, it’s going to cost some bucks.

So, again, with the benefit of hindsight, I’d have done that differently. Plus WordPress templates are pretty amazing these days, so it’s all easy enough to do cheaply right out of the gate.

3. Monthly, not quarterly, billing.

I made this change after my first year, and am thankful for it. I originally launched my Spoke Fund under a quarterly billing plan, meaning FOLIO deducted my fees from client accounts and forwarded them to me four times a year. At the time, a quarterly plan seemed to me to be something that investors might prefer, as it meant that my fees were tied a little closer to the performance of the portfolio. If the value of the portfolio rose that quarter, I’d make more, and if it fell, I’d make less – which is about as close as I could get to charging any kind of easily scalable “performance fees” when it came to non-accredited investors. Also thought quarterly billing would underscore that I wanted my investors to be thinking long-term.

Thing is, nobody cared. Really makes no difference to my investors if I bill them quarterly or monthly – but it can make a helluva difference to your firm in terms of cash flow when starting out. My investors are much more concerned with performance and bips charged than the timing of those fees…which seems obvious in retrospect, but hey, when you’re starting out, ya need all the friends you can get.

So, what seemed like a more investor-friendly billing schedule was really just something I’d over-thought. Better to get paid every month early on.

Some follow-up thoughts and clarifications from the webinar last week:

1 – The VA (virtual assistant) firm I use is www.MyAspirant.com. $10 an hour, can handle all sorts of things including HTML edits, highly recommended.

2 – Below is a video from my accountant, also highly recommended, who does everything remotely for me. That includes all entries in Quickbooks (I use Quickbooks Online) and all invoicing/receipts at the end of every month/quarter. You can reach Terry Santore directly at www.quicksilverbusinesssolutions.com or (910) 202 -3955.

Cannot tell you how nice it is to have someone responsive, competent and tech-savvy handling the books. I just email Terry quick notes whenever I move money into my business checking accounts from FOLIO, send her PDF copies of the billing reports that FOLIO creates for my clients so we can track who has paid what fees in QB, and then otherwise let her update it all. Also ping her on one-off things every so often. It all works real well.

Worked pretty closely with Terry for the first month or so, just getting her up to speed on my processes and all the nuance of things, but otherwise, now I just sit back. More importantly, I do not spend any time at all worrying about updating QBks. Which, again, is very nice. And if you get the old surprise compliance audit, you can bet your arse they’re gonna want to see your books. So, peace of mind there, too.

3 – The “GTD” I referred to on the webinar was “Getting Things Done” – a personal productivity philosophy of sorts that a friend in Silicon Valley recommended to me a few years back. Here is the book that started it all on Amazon, though there is a ton more online about GTD via Google. And here is the site. The good news is that while GTD can take a while to master (and I certainly have not), you can pick up the basics pretty quick, and even those can have an immediate impact on your business – and sanity, too.

4 – FOLIO charges my investors and I 30 bips, but has a $100 a year minimum fee, too…so the way the math shakes out is that for every account I have that is under $33,333, FOLIO charges them $100 a year, and anything over, they take the 30 bips. There are breakpoints at FOLIO, too, at $250k and $1M, so fees go down to 20 bips and then 10 bips. And using the windows at 11am and 2pm, all trades are free.

5 – That point in #4 also leads to the issue of subsidizing accounts. FOLIO is going to get paid no matter what. So if I bring on an investor with a $5,000 account, then as per the above, FOLIO will charge them $100 per year…which equates to annual fees of 2.0% – and I haven’t even gotten paid yet. On a $2,500 account, the investor is paying 4.0% to FOLIO right out of the gate, and so on.

So you may need to actually reimburse or subsidize a small client’s account with x dollars per quarter so the effective expense ratio they are paying is fair and/or reflects the terms of your Investment Advisory Contract with that investor. To be clear, everything and anything when it comes to fees is disclosed to the investor upfront – and subsequently every month in their statements from FOLIO – but just disclosing a 4.0% fee (to stay with the above example) is not enough to me. You’re a fiduciary, man. It’s your job to make sure your investors aren’t getting charged a single penny in excessive fees, regardless of whether or not it has been “properly disclosed.”

My point on the webinar was that it can sometimes make sense to take on a very small account because assets attract assets. For instance, if the world’s best tarpon fishing guide here in town wants to invest a little with me, and I know that he routinely guides for several billionaires, and that he likes to talk a lot, then I am going to subsidize that account every quarter with a smile on my face. That sort of thing.

And originally, I had a plan to service even those smaller accounts profitably, with no subsidy involved, which entailed lumping all of those smaller investors into an investment club I created just to invest in my Spoke Fund. (FOLIO can service accounts for investment clubs). Then I would become a member of that investment club, too. If I seeded that club with $33,333, then every other investor no matter how small I brought on would be profitable to me and require no subsidy…because all fees were assessed on the pool, not the individual club members.

But, I never went anywhere with that idea. It was going to cost me more to make sure I could do all that from a compliance perspective than I thought I’d make in fees from rolling all that out.

Better in my mind to know upfront just how much money you’re willing to put towards subsidizing small accounts, and having defined criteria for the investors you would do that for…and then sticking to that after you launch. I happen to have six accounts I subsidize, but each one has since referred other bigger investors that more than make up for that subsidy. My hunch is that others have similar experiences, too.

6 – And lastly, alas, I’ve got bupkus saved from that webinar. Not even any audio.

If there is interest, though, I’m happy to do a quick conference call to go over any pending Q&A from that slideshow.

Next week will be tough, but let me know and we can do something on a call the week after, eh?

My apologies. It appears the actual recording of the webinar didn’t take. Ugh. Here are the slides from Monday’s webinar, and please let me know of any questions. I’ve got a few from after the webinar that I’ll type up soon as posts here, too.

Thanks again to everyone who joined, and sorry about the lack of a replay.